Germany’s iron cage

Germany adopted the social market system of economic rules separated from political democracy, known as ordoliberalism, after 1945; it was later used as the ideological basis of Europe Union economic policy.

Ordoliberals, like the Anglo-Saxon advocates of laissez-faire, believe the state should not distort the workings of the markets, but they also believe that free competition does not develop spontaneously. The state should establish a legal, technical, social, moral and cultural framework for the markets, and make sure everyone follows the rules.

The rise of ordoliberalism was part of a vast international renewal of liberal thought in the 1930s — neoliberalism. In this context, the ordos opposed those nostalgic for laissez-faire — Ludwig von Mises and his disciple Friedrich Hayek — who, Rüstow complained, “found nothing to criticise or to change in traditional liberalism.”